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For-hire town-car drivers who operate in a shadow industry without proper licenses or insurance could find it tougher to do business under legislation currently before state lawmakers in Olympia.

Senate Bill 5502 aims at an ongoing problem in Seattle with unregulated drivers who illegally pick up passengers in shiny Lincoln Town Cars, stealing business from taxis and legitimate town-car drivers and limo companies.

"The reason for this bill right now is the limousine industry is essentially unregulated," said Seattle Democratic Sen. Scott White, the bill's sponsor, during a Feb. 17 hearing of the Senate Transportation committee.

"That brings up two issues: Both a safety issue and underground economy issue. From a safety standpoint, it's imperative that we have people operating these small businesses who are trained, licensed and insured and operating in a proper manner out on the streets and highways of our state," he said.

The legislation, which is pending in the state Senate, would allow the city's Consumer Affairs Unit to assume the same enforcement authority over town cars and limousines that it wields over the taxi industry.

City officials have sought the legislation over the past two years. Officials say a small fraction of town-car chauffeurs get into the industry without proper licensing and operate as illegal taxi cabs, illegally picking up fares off the streets.

State law requires that town car and limo rides be prearranged, meaning customers must call ahead to hire a town car. Trips solicited from the ferry docks or on city streets, as often happens now, are prohibited.

Seattle is home to about 80 percent of licensed limos and executive sedans statewide. But city officials have no authority to enforce state regulations because the Department of Licensing has control over limousine laws but doesn't have enough money to stringently enforce them.

The Seattle Post-Intelligencer reviewed state and local records in 2007 and found alarming instances in which town-car drivers flouted the law. In one case, a registered sex offender was picking up customers at Colman Dock. In another case, a driver held a California woman against her will after he pretended to work for a limousine company she'd hired to take her from Seattle-Tacoma International Airport.

"We know from previous research that a certain number of them don't have any insurance," said Craig Leisy, manager of Seattle's Consumer Affairs Unit, which already regulates taxicabs. "We'd like to get them off the road right away to protect the public."

White, the bill's sponsor, has tried twice to pass legislation that would bring tougher enforcement at the local level. Last year, the bill died over objections from independent town-car drivers, who complained that it would single out an industry dominated by disadvantaged immigrants or who can't afford to crack into the taxi business.

During this year's committee hearing, White said he'd worked with all stakeholders on fine-tuning the legislation. It was unclear Tuesday whether the legislation has enough momentum this year.

The city and King County regulate how many licenses are issued for cabs, meaning that new taxi drivers have to lease or pay big money to buy a taxi license from a current holder.

The state, unlike the city's taxi enforcement office, doesn't have enough employees to regularly audit license holders. Enforcement operations happen once or twice a year, and investigations must go through a slow administrative process.

Licensing fees would have to increase to pay for more enforcement. The legislation would set maximum limits on future fee increases: Individual limousine licenses could not exceed $75; limousine carrier business licenses could not exceed $350; and fees for vehicle inspections could not exceed $25. The legislation would generate about $447,000 between 2013 and 2015.

About $160,000 per year would go to Seattle to pay for an additional full-time inspector to enforce state law in the field. It also would help pay for a part-time administrative specialist to audit town-car insurance records, Leisy said.

Currently, limo licenses are $25 for single vehicles and $40 for limousine carrier licenses.

Some independent town-car drivers, however, told lawmakers they're concerned the legislation is more about bigger companies pushing out smaller competitors.

The bill's most current version wouldn't take effect until Jan. 1, 2013.

Most limo operators follow the rules, industry representatives say. But the executive-sedan law, as it is currently written, largely relies on companies to self-regulate. License holders certify that their drivers meet qualifications and pass criminal history checks. But 70 percent of the industry is made up of independent, single-vehicle owners, who, under current law, essentially police themselves.

State law currently requires town-car drivers to operate from an office, but many take calls on cell phones from their car. The law exists so that there are records of trips and customers to protect consumers.

The legislation would give town-car drivers some leeway, allowing them to work from their vehicles. But it would require them to list a telephone number and physical address on their master business licenses and keep electronic records verifying their trips were prearranged.